Other anti-avoidance rules

The ‘unallowable purposes’ rule at CTA09/S441 (CFM38100) and the rules on non-arm’s length transactions (CFM38400) are the key anti-avoidance legislation within the loan relationships regime.

However, there are other anti-avoidance rules that may counteract specific abuses. These are the rules on

‘tax relief schemes’, which involve artificial payments of interest where the ‘sole or main benefit’ is to obtain tax relief - rules which pre-date the loan relationships legislation in FA96 (CFM39020);

The ‘disguised interest’ rules in CTA09/PT6/CH2A, (CFM42000) which are a successor to the ‘shares as debt’ rules formerly in CT09/PT6/CH7 (CFM45000). Note that these rules take precedence over the arbitrage’ rules involving ‘hybrid securities F(No.2)A05/SCH3).